How are credit scores determined?

Nearly 40 percent of the adults in this country have no idea how credit scores are determined, according to a recent survey by CompareCards.

The two most important factors are:

1. How often you pay your bills on time – that's 35 percent of your score.

A single late payment of 30 days or more can cause your score to drop by 100 points or more. And it will take a very long time to erase the damage.

If you can't pay off the balance in full, at least make the minimum payment that month. It's much better than paying late. If the problem is remembering to pay, set up automatic payments or payment reminders.

2. How much debt you have compared to your available credit – that's 30 percent of your score.

This ratio of debt to available credit it called credit utilization and the lower the better. Personal finance experts say it's best to keep your credit balances at less than 25 percent of your available credit. Max out your cards, even if you don't go over the limit and your credit score will take a beating.